The Department of Labor (“DOL”) released a fact sheet in March 2014 detailing a proposed amendment to Section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (“ERISA”) that would, if passed and enacted, require a guide for plan fiduciaries to follow when disclosures are provided, particularly “if the disclosures are contained in multiple or lengthy documents.” In current regulation, pension plan service providers must provide disclosure documents to plan fiduciaries “before entering into, extending or renewing contracts or arrangements for services,” but these documents can be “complex” and difficult to navigate, making compensation information related to service providers harder to find.

Even though spring has only just begun, politicians are already starting to gear up for the November elections. Not only will the election for the US Senate be held this year, but also a myriad of state and local elections will take place. With this backdrop, it’s the perfect time to revisit the Securities and Exchange Commission’s (“SEC’s”) Rule 206(4)-5 (the “Rule”) of the Investment Advisers Act of 1940 (the “Advisers Act”), more commonly referred to as the “pay-to-play” rule. “Pay-to-play” generally refers to various arrangements whereby an investment adviser may seek to influence the award of advisory business by making or soliciting political contributions to government officials who have the ability to award such business. While this rule has been in effect since 2011, this article will serve as a reminder of the key components of the Rule and discuss updates promulgated by the SEC since the Rule’s adoption.

The ripple effects of the 2008/2009 financial crisis still echoes throughout most US industries today. Fraudulent acts of certain “bad actors” – both individuals and firms in the financial industries during this time – are also still being discovered today. Take for example the now-defunct international law firm Dewey & LeBoeuf, who according to a March 6, 2014 press release issued by the Securities and Exchange Commission (“SEC”), has been charged with creating a $150 million fraudulent private bond offering. According to the release, this offering misled investors on the financial health of the law firm, which was struggling as a result of the recession, “steep costs from a merger”, and surmounting fear of severed credit lines from bank lenders.

As an Arizona-based private equity fund and its manager discovered at the end of February 2014, paying one’s expenses with client’s assets is both problematic and liable to receive prosecution by the Securities and Exchange Commission (“SEC”). Clean Energy Capital, LLC (“CEC”) and its private equity fund manager Scott Brittenham were issued charges by the SEC on February 25, which detailed how $3 million of the fund’s expenses were paid “improperly” with assets from 19 funds that invest in private ethanol production plants.

A new initiative with the Office of Compliance Inspections and Examinations (“OCIE”) at the Securities and Exchange Commission (“SEC”) is aimed at registered investment advisers who have never undergone examination by the SEC. According to a February 20, 2014 press release, this demographic of advisers primarily includes those who have been registered with the SEC for “three or more years” and who have not been examined since their initial registration. The so-called Never-Before Examined Initiative (the “Initiative”) seeks to conduct examinations on “a significant percentage” of these advisers, with the goal of providing both examination experience and education in the process.

A further turn in the arena of regulations toward client disclosures and agreements has taken place at the Financial Industry Regulatory Authority (“FINRA”), where a newly-approved rule on conditioning settlement agreements was detailed in a February 13, 2014 press release. According to the release – which will be brought to the Securities and Exchange Commission (“SEC”) for public comment and review/approval – FINRA’s Board of Governors approved a rule proposal that will restrict firms and “associated persons” from using client agreements to condition settlements of customer disputes that prevent a customer from opposing an expungement request for information in an associated person’s Central Registration Depository (“CRD”) record.

In a recent interview with Drew Bowden, the Director of the Securities and Exchange Commission’s (SEC’s) Office of Compliance Inspections and Examinations (OCIE), he spoke to the mission, role and complications associated with operating the examination branch of the SEC – and more specifically, outlooks for the future of OCIE.

The importance of adequate and effective Anti-Money Laundering (“AML”) programs should never be underestimated in the current US regulatory environment, as the Financial Industry Regulatory Agency’s (“FINRA’s”) January 28, 2014 announcement of penalties against the firm Banorte-Ixe clearly illustrates. The FINRA news release details the penalties and oversights that led it to fine Banorte-Ixe Securities International, Ltd. $475,000 for AML and registration failures. Subsequently, the firm’s AML Officer and Chief Compliance Officer (“CCO”) Brian Anthony Simmons, was suspended for 30 days in a principal capacity.

In his January 24, 2014 speech Securities and Exchange Commission (“SEC”) Commissioner Daniel M. Gallagher stated that “two issues that…should be at the very top of the SEC’s agenda”, a “revamping” of the SEC’s corporate disclosure system and a series of “much needed reforms” for the proxy advising industries. In this blog post, we will summarize the primary points that Gallagher addressed in his speech about the first of these two issues: the topic of disclosure.

The Securities and Exchange Commission (“SEC”) began the first month of the year 2014 with a range of new regulatory charges and fines issued against financial individuals and advising firms, including a portfolio manager formerly associated with a private equity firm. Specifically, Oppenheimer & Co. was charged with fraud for its fund valuation in late January. Brian Williamson was first faced with charges in August 2013, and on January 22, 2014, he agreed to settle the matter. This included paying a $100,000 fine, a cease-and-desist order and being banned from the securities industry for two years for “making misrepresentations about the valuation of a fund consisting of other private equity funds.”